Korean Won Hits Yearly Low Against Dollar, Divided Market Views on Further Depreciation

The Korean won has hit its lowest level this year against the U.S. dollar, falling to the 1,410 won range in the second week of August.

This decline marks a significant drop from the 1,507.6 won level seen in the third week of May and is attributed to multiple factors.

SK Hynix's conversion of dollar proceeds from its ADR listing into won has put downward pressure on the exchange rate.

Exporters selling dollars and reduced foreign investor selling have also contributed to the strengthening trend.

A softer U.S. dollar, due to weakening expectations for a year-end Fed rate hike, has provided additional support for the won.

The Bank of Korea's Deputy Governor Yoo Sang-dae stated that while inflation may not reach 2% target, the central bank will maintain its tightening stance as long as inflation fails to stabilize.

Market views are divided on the outlook, with some expecting further depreciation and others believing the current level has confirmed a short-term floor for the won's decline.